Compute the price elasticity of demand between two points

Assignment Help Business Economics
Reference no: EM13851712

Suppose you are the manager of a restaurant that serves an average of 400 meals per day at an average price per meal of $20. On the basis of a survey, you have determined that reducing the price of an average meal to $18 would increase the quantity demanded to 450 per day.

Compute the price elasticity of demand between these two points.

Would you expect total revenues to rise or fall? Explain.

Suppose you have reduced the average price of a meal to $18 and are considering a further reduction to $16. Another survey shows that the quantity demanded of meals will increase from 450 to 500 per day. Compute the price elasticity of demand between these two points. Would you expect total revenue to rise or fall as a result of this second price reduction? Explain.

Compute total revenue at the three meal prices. Do these totals confirm your answers in (b) and (d) above?

Reference no: EM13851712

Questions Cloud

Contracts the removal of small amounts of hydrogen sulfide : Burling Water Cooperative currently contracts the removal of small amounts of hydrogen sulfide from its well water using manganese dioxide filtration prior to the addition of chlorine and fluoride. Assume payment is made at the end of each contract y..
Explain which tables columns keys will be seen in the schema : Using both MySQL Server and MySQL Workbench, create a schema called ABC_YourLastName. Explain which tables, columns, keys, and so on will be seen in the schema
Contrast the major negative fluctuation : Compare and contrast the major negative fluctuation in the 1980s with that of the Great Recession (post-2007) with a focus on (i) the extent of the fluctuation and (ii) the speed of the recovery.
Tax-policy model assumes no autonomous tax : Tax-policy model assumes no autonomous tax.
Compute the price elasticity of demand between two points : Suppose you are the manager of a restaurant that serves an average of 400 meals per day at an average price per meal of $20. On the basis of a survey, you have determined that reducing the price of an average meal to $18 would increase the quantity d..
What are different methods for sharing knowledge : Post a business email to management that reflects on the following questions: What are different methods for sharing knowledge? How does knowledge management benefit employees in an organization
Decrease in output associated with recession : In response to the Great Recession a number of European governments adopted aus- terity policies which cut government spending on goods and services. Assuming no change in autonomous consumption or in autonomous investment, explain whether such an au..
The average rate of growth for slow-growth countries : The average rate of growth for slow-growth countries is around 2% per year, and for fast-growth, greater than 5% per year.  Suppose the growth rate of the economy is 2%. The size of the economy roughly doubles every: Economic growth is important to u..
Important biographical information about the individual life : Write a well-constructed article on one muckraker using the outline you created during your website research. Include important biographical information about the individual's life. Give specific examples of articles and books that were written. What..

Reviews

Write a Review

 

Business Economics Questions & Answers

  Short run effects of decreasing government spending

Using an aggregate supply/aggregate demand model illustrate and explain the short run effects of decreasing government spending (assuming you began in a short run and long run equilibrium).

  Demand decreases and supply increases then for sure

If both demand decreases and supply increases then for sure. Which of the following will decrease the demand for chicken?

  Determine its optimal average cash balance

The Duckett Group is trying to determine its optimal average cash balance. The firm has determined that it will need $8,100,000 net new cash during the coming year. According to the Baumol model, what should be Duckett’s average cash balance?

  Explain the argument that lower corporate tax rates

Explain the argument that lower corporate tax rates can increase tax income in Kenya. Reflect on the Laffer curve in your explanation.

  Three adm executives

One of the three ADM executives was actually an informant who tipped off the Feds about this conspiracy. Which executive was he. Why did he rat out his co-workers.

  What would be the non pecuniary cost of legislation

From California to New York, legislative bodies across the United States are considering eliminating or reducing the surcharges that banks impose on noncustomers, who make $12 million in withdrawals from other banks’ ATM machines. On average, noncust..

  Effective method of destroying

According to Friedman, is the most effective method of destroying a free market?

  Labor force participation rate

The number of people employed in a city was 128,000. The adult population was 201, 000 and the labor force participation rate was 67%. Based on the figures listed above, what is (1) the unemployment rate, (2) labor force participation rate, (3) numbe..

  Illustrate what effect will this have on its optimal price

The U.S. cigarette industry has negotiated with Congress and government agencies to settle liability claims against it. Illustrate what effect will this have on its optimal price.

  Describe some aspects of macroeconomics

Based on what you have studied so far in this course, discuss and describe some aspects of macroeconomics that an be useful in your future (...yes, it can be aything we discussed in this course - Macroeconomics). Your discussion should be more than h..

  Illustrate the consumer surplus that occurs

draw a supply and demand graph to illustrate the consumer surplus that occurs when the market is in equilibrium

  Illustrate what role did the policies of various governments

Illustrate what role did the policies of various governments play in influencing the international expansion strategies of both McDonald's and Wal-Mart.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd